State Bank of Bikaner & Japiur (SBBJ), which is offering up to 0.25 per cent discount to online loan applications, has said it has become the first public sector lender to bring down the bulk deposits level to 10 per cent.

"As of November, our bulk deposits stood at 10 per cent, a level that is much below what the government desired. This was 16.6 per cent a year ago and 14.46 per cent at the end of the September quarter," SBBJ managing director Shiva Kumar said.

Kumar also said the bank, which gets 65 per cent of business from the home state of Rajasthan, is making a big online push to speed up service delivery. The bank's low-cost

Casa deposits stand at 37 per cent, he added.

"We are offering a 10 bps discount to home loan applications made online for any amount, while the discount is 25 bps (0.25 per cent) for auto loans bought online if the amount sought is above Rs 10 lakh," said Kumar.

If all documents are in place, the turnaround time for disbursement is three days for home loans, and 24 hours for auto loans. In October, the bank received 167 car loan applications and 57 home loan applications online.

Bulk deposits are usually term deposits above Rs 1 crore, with a maturity of less than a year.

On July 19 this year, the finance ministry had issued a circular to the state-run banks asking them to cap bulk deposits at 15 per cent – 10 per cent of normal bulk deposits

and 5 per cent of certificates of deposits (CDs).

Financial Services secretary D K Mittal had said that large amount of bulk deposits is a risk to the banking system.

The move was aimed at improving PSB's asset-liability management. It also followed rush for these high-cost deposits, especially by public sector lenders, during the January-March quarter. It had resulted in short-term rates shooting through the roof.

However, banks say putting a ceiling on bulk deposits will reduce their flexibility to cut retail fixed deposit rates in a declining rate cycle which will mean pressure on net interest margins.